Frontier Fengrain tie up??

[Widgetone]

Haha, didn't want to stir things up too much.

 

[Alistair Nelson]

I've just had that email too. Union Invivo are selling their half share of Gleadell to ADM. Union Invivo are a French farmer co-op run by professionals. I had the opportunity to see them in Paris a few years ago with Gleadell (just after TFF was born & I met @Clive and @Alistair Nelson there too)

Yes remember it well. Sadly I don’t think this is a great deal for farmers in the long or for Gleadell but time will tell.

 

[Hay Hoe Lets Mow]

Sunderland have the 8th largest stadium in England, yet are in League One and playing Scunthorpe on Saturday.... !!

 

[Banana Bar]

We haven't traded with frontier for 8 years now as we got fed up of their attitude. Not saying we won't ever trade with them again but we've certainly not missed them. Farmers don't need frontier but Frontier do need farmers.

I have to say Frontier are streets ahead of their competitors in this area. Paperwork, payments, fixings and communications are all spot on. I never have to chase paperwork unlike Gleadell and Openfield and don’t get me started on Fram Farmers

BB

 

[Hot gossip]

Should possibly need to rename the thread to ' Grain merchant developments daily wrap up '

So we have

Premier division
ADM Ag
Frontier
Openfield

Championship
Cefetra
Cofco
Glencore
Saxon

+ Indie league

Any omissions? ( or even emissions? )

I think your premier league is a bi optimistic to include Openfield. Here's my Premier league on financial security only:
Frontier
Adm Ag
Cefetra
Cofco
Glencore
Saxon
All others are out of this place. That's plenty of choices to sell to I know. After this it's:
Do you like the rep, does he know his stuff?
Are the lorries run well?
Is the paperwork good?
Do they offer a good range of pricing tools and destinations?
After that it's all down to timing of the sale, end of.

 

[texas pete]

I think your premier league is a bi optimistic to include Openfield. Here's my Premier league on financial security only:
Frontier
Adm Ag
Cefetra
Cofco
Glencore
Saxon
All others are out of this place. That's plenty of choices to sell to I know. After this it's:
Do you like the rep, does he know his stuff?
Are the lorries run well?
Is the paperwork good?
Do they offer a good range of pricing tools and destinations?
After that it's all down to timing of the sale, end of.

Which one do you work for then??

 

[willy]

Frontier simple safe and (paper work) spot on.

Also Toseland grain- small (without the overheads) local and honest.

My 2 favourites but each to their own.

 

[bobk]

Frontier for me , they always pay .

 

[David.]

Paul was good bloke when he was at Viking.

 

[Farmer-George]

I think your premier league is a bi optimistic to include Openfield. Here's my Premier league on financial security only:
Frontier
Adm Ag
Cefetra
Cofco
Glencore
Saxon
All others are out of this place. That's plenty of choices to sell to I know. After this it's:
Do you like the rep, does he know his stuff?
Are the lorries run well?
Is the paperwork good?
Do they offer a good range of pricing tools and destinations?
After that it's all down to timing of the sale, end of.

I’d probably remove the following from that list based on their last reported accounts on companies house.

Cofco lost £3.15 million - 2017
Glencore lost £3.26 million - 2017

Would definitely redefine the top dogs as

Saxon (Graincorp) £849k profit - 2017
Cefetra £2.79 million profit - 2017
ADM Ag to complicated at this stage
Frontier £27.43 million profit 2017

 

[Honest john]

I’d probably remove the following from that list based on their last reported accounts on companies house.

Cofco lost £3.15 million - 2017
Glencore lost £3.26 million - 2017

Would definitely redefine the top dogs as

Saxon (Graincorp) £849k profit - 2017
Cefetra £2.79 million profit - 2017
ADM Ag to complicated at this stage
Frontier £27.43 million profit 2017

For ADM you could use Gledall & ADM results.

 

[Farmer-George]

For ADM you could use Gledall & ADM results.

Very interesting reading the ADM UK ltd they lost a lot of money!!

£18.49 million loss after tax for 2017 compared to a profit of £11.15 million for 2016.

After looking at the figures for Gleadell who made a modest £1.76 million profit 2017.

Main conclusion is that the profit of these firms is shrinking, meaning margins are getting slimmer?

I worry that the smaller merchants will continue to get swallowed up by the big 3.

Frontier, ADM and Cefetra have all been actively buying other businesses. Dalmark, Gleadell, Fengrain and premium crops have all been acquired in the last 12 months by the big 3.

Who’s next?

 

[Baling Hay]

Very interesting reading the ADM UK ltd they lost a lot of money!!

£18.49 million loss after tax for 2017 compared to a profit of £11.15 million for 2016.

After looking at the figures for Gleadell who made a modest £1.76 million profit 2017.

Main conclusion is that the profit of these firms is shrinking, meaning margins are getting slimmer?

I worry that the smaller merchants will continue to get swallowed up by the big 3.

Frontier, ADM and Cefetra have all been actively buying other businesses. Dalmark, Gleadell, Fengrain and premium crops have all been acquired in the last 12 months by the big 3.

Who’s next?

The industry has to consolidate as it is over-capacity currently. There are fewer farmers than ever but probably the same amount of farm traders. When you have a farmer who gets a phone call from 5 to 6 farm traders on the same day to buy 29 tonnes of Oilseed rape then margins end up going to nothing.

Combine this with the fact the trade lacks discipline and seem happy to buy a load of rapeseed for £1 per tonne margin. So the merchant gets £29 of margin on a £10k load of rapeseed just to keep the business, but the business is costing them A LOT of money as they have:

- Farm traders to pay
- Logistics to organise and pay
- Back office staff to do the contract paperwork
- Hedge the currency
- Hedge the flat price
- Pay for storage commitments
- Take on so much risk

If you look at most merchant accounts, their overheads are about £5 per tonne minimum, but there is not a merchant in the land that gets £5 per tonne margin on a farm purchase. They therefore have to take speculative positions and risk to simply cover costs to subsidise their origination businesses to have the pleasure of buying grain from a farmer....and all the sh!t that goes with it.

Basically be very careful who you all deal with as there is a potential Armageddon coming to the UK grain industry!

There will be just a handful of merchants in the UK very soon.........

 

[ajd132]

The industry has to consolidate as it is over-capacity currently. There are fewer farmers than ever but probably the same amount of farm traders. When you have a farmer who gets a phone call from 5 to 6 farm traders on the same day to buy 29 tonnes of Oilseed rape then margins end up going to nothing.

Combine this with the fact the trade lacks discipline and seem happy to buy a load of rapeseed for £1 per tonne margin. So the merchant gets £29 of margin on a £10k load of rapeseed just to keep the business, but the business is costing them A LOT of money as they have:

- Farm traders to pay
- Logistics to organise and pay
- Back office staff to do the contract paperwork
- Hedge the currency
- Hedge the flat price
- Pay for storage commitments
- Take on so much risk

If you look at most merchant accounts, their overheads are about £5 per tonne minimum, but there is not a merchant in the land that gets £5 per tonne margin on a farm purchase. They therefore have to take speculative positions and risk to simply cover costs to subsidise their origination businesses to have the pleasure of buying grain from a farmer....and all the sh!t that goes with it.

Basically be very careful who you all deal with as there is a potential Armageddon coming to the UK grain industry!

There will be just a handful of merchants in the UK very soon.........

Excellent post

 

[Hot gossip]

Which one do you work for then??

None of them, I just try to think like one of them. That's my way of keeping up with the game.
Problem with us farmers is that we think small and local, and that's just plain daft when events happen in the world that affect all of us. Being a stay-at-home grumpy git who only shares views with people that think like us is a rubbish idea. I purposefully try to engage with others outside of my farmer friends group. It helps me to understand what others really think of us too - which is not always good and we are rubbish at getting our good messages out there.

 

[ajd132]

Listen to Jon Duffy of AF group talking about this. Very very sensible. It might help people understand how the co-ops work and who actually owns what.
http://www.dewinggrain.co.uk/podcast

 

[Honest john]

The industry has to consolidate as it is over-capacity currently. There are fewer farmers than ever but probably the same amount of farm traders. When you have a farmer who gets a phone call from 5 to 6 farm traders on the same day to buy 29 tonnes of Oilseed rape then margins end up going to nothing.

Combine this with the fact the trade lacks discipline and seem happy to buy a load of rapeseed for £1 per tonne margin. So the merchant gets £29 of margin on a £10k load of rapeseed just to keep the business, but the business is costing them A LOT of money as they have:

- Farm traders to pay
- Logistics to organise and pay
- Back office staff to do the contract paperwork
- Hedge the currency
- Hedge the flat price
- Pay for storage commitments
- Take on so much risk

If you look at most merchant accounts, their overheads are about £5 per tonne minimum, but there is not a merchant in the land that gets £5 per tonne margin on a farm purchase. They therefore have to take speculative positions and risk to simply cover costs to subsidise their origination businesses to have the pleasure of buying grain from a farmer....and all the sh!t that goes with it.

Basically be very careful who you all deal with as there is a potential Armageddon coming to the UK grain industry!

There will be just a handful of merchants in the UK very soon.........

I think you are spot on here.

My Question for the traders on here.
Why have a cost structure that requires you to trade the tonnage multiple times.

Many blame Brexit. But there was only risk where a book was left open in the hope of making a gain.

 

[Baling Hay]

I think you are spot on here.

My Question for the traders on here.
Why have a cost structure that requires you to trade the tonnage multiple times.

Many blame Brexit. But there was only risk where a book was left open in the hope of making a gain.

I don't think there cost structure was ever set up to trade the tonnage multiple times, but rather was set up at a time when there was better margins per tonne and also less on farm storage and also larger crop surpluses.

 

[Honest john]

Very interesting reading the ADM UK ltd they lost a lot of money!!

£18.49 million loss after tax for 2017 compared to a profit of £11.15 million for 2016.

After looking at the figures for Gleadell who made a modest £1.76 million profit 2017.

Main conclusion is that the profit of these firms is shrinking, meaning margins are getting slimmer?

I worry that the smaller merchants will continue to get swallowed up by the big 3.

Frontier, ADM and Cefetra have all been actively buying other businesses. Dalmark, Gleadell, Fengrain and premium crops have all been acquired in the last 12 months by the big 3.

Who’s next?[/QUOTE

Very interesting reading the ADM UK ltd they lost a lot of money!!

£18.49 million loss after tax for 2017 compared to a profit of £11.15 million for 2016.

After looking at the figures for Gleadell who made a modest £1.76 million profit 2017.

Main conclusion is that the profit of these firms is shrinking, meaning margins are getting slimmer?

I worry that the smaller merchants will continue to get swallowed up by the big 3.

Frontier, ADM and Cefetra have all been actively buying other businesses. Dalmark, Gleadell, Fengrain and premium crops have all been acquired in the last 12 months by the big 3.

Who’s next?

Are you sure of your figure re ADM ? After A quick look on Companies house.

ADM Milling LTD.
Showing a loss of 2,052,321 / 2017.

There's other companies with ADM in their name.

 

[Widgetone]

I don't think there cost structure was ever set up to trade the tonnage multiple times, but rather was set up at a time when there was better margins per tonne and also less on farm storage and also larger crop surpluses.

To my mind, the big hitters league will want to get bigger still in the desire to keep increasing their market share and therefore keeping investors/lenders/credit ratings/general clout at a certain strategic level. The middle/smaller players in turn can make headway by concentrating on keeping their farm suppliers on board so as to supply the big league in the wholesale global grain markets.

Margins have always been poor for the time, money, and effort expended at all levels in the grain trade for decades, and from time to time an individual grain business will realise this, and throw in the towel and merge/take the money offered to sell up. Its worrying that a business like Fengrain with all the paid for added value opportunity of a central store decide they are not sustainable.